I enjoyed Paul's post on money sufficiently to make my first foray
onto OPE-L. What I hope to point out is that marxian treatment of
money has focused on the misleading discussions of commodity money
in the early chapters of Capital I, whereas a much more perceptive
analysis exists in Capital III and Theories of Surplus Value III.

What I see in Paul's comments is a critique of the notion of
money as presented in Capital Vol. I, where Marx largely treats
gold as the money commodity. The word commodity is important,
because with gold as that commodity, the supply of money is
constrained by the same factors that constrain the production
of any other commodity. If more money is demanded, more labor
and materials must be devoted to the production of the money
commodity, gold; if, for whatever reason, twice as much money
commodity turns up on the market, then its relative price
will tend to fall, leading to "inflation"... All of which is
pretty simplistic Quantity Theory of Money stuff, however it
is dressed up.

Instead, Paul's notion is that gold was just the late feudal
and early capitalist means of representing debts, commodity
transfers, chosen because it was durable and impossible to
forge. "Real" money it is not; in fact, our present methods
are closer to pure debt and credit than commodity-constrained
gold.

However, Marx does have a fledgling analysis of credit money
in Capital III and TSV III. The notion he explores is that,
in the case of a commodity, the buyer of pays for its value
and consumes its use-value, so that its exchange-value is
set by its value. However, in the case of money, the buyer
pays its *use-value* to enjoy its use-value: its exchange-
value is set by its *use-value*.

In the case of money, this means that ... a dollar costs a
dollar, rather than the fractions of a cent it takes to
produce it. The real meat to this concept comes when Marx
starts to consider the price of a loan, and the exchange-value
of an undeveloped mine. When discussing loans, he says:

"What, now, does the industrial capitalist pay, and what is,
therefore, the price of the loaned capital?... What the buyer of
an ordinary commodity, buys is its use-value; what he pays for is
its value. What the borrower of money buys is likewise its
use-value as capital; but what does he pay for? Surely not its
price, or value, as in the case of ordinary commodities." (Marx
1894, p. 352.)

Thus, rather than the rate of interest being set by the cost
involved in issuing a loan, it is set by the use-value of the loan
itself, and "Its use-value, however, lies in producing profit"
(Ibid., p. 355. See also Marx 1861, Part III., pp. 457-58).

This use-value is obviously speculative: the borrowing capitalist
cannot "know" just how much profit the endeavour enabled by
the loan will actually generate. It is thus, in that sense,
a subjective use-value, quite in contrast to the objective
concept of use-value that Marx uses when considering
ordinary commodities.

Marx extended this result to assets--factories, mines, etc.--which
are purchased or hired in order to generate a stream of income
(Ibid., p. 458-459; 1861, Part II, p. 249; 1894, pp. 353-356). For
example, Marx chastised Ricardo for explaining the price of
minerals in situ on the basis of their "value", when no labor has
gone into their production. Marx points out that they therefore
contain no value--though they have obvious potential quantitative
use-value, determined by the expected sale price of the estimated
quantity of ore. Thus, if mining rights and the like could be
purchased, like commodities, for their cost of production, they
would be free. Hence as with loaned capital, the exchange-value of
assets is determined not by their costs of production, but by
their perceived use-value--that of being a potential source of
their perceived use-value--that of being a potential source of
exchange-value:

"Ricardo never uses the word value for utility or usefulness or
"value in use". Does he therefore mean to say that the
"compensation" is paid to the owner of the quarries and coalmines
for the "value" the coal and stone have before they are removed
from the quarry and the mine--in their original state? Then he
invalidates his entire doctrine of value. Or does value mean here,
as it must do, the possible use-value and hence the prospective
exchange-value of coal or stone?" (Marx 1861 Part II, p. 249)

Again, this is a subjective expectation--the amount of minerals
in the mine can only be estimated, as can the future prices
those minerals will earn, etc.

This form of analysis is much closer to Post Keynesian
notions of credit and endogenous money than the kind of
monetary analysis that has evolved out of those early,
commodity-dominated chapters of Capital I.